Playing To Win
How to Thwart Strategy Masquerades
Telltales & Productive Planning
A reader (thanks, Marshall) asked me a question following up on my A Plan is not a Strategy video: “What practical step can companies take to ensure that their planning truly complements and enhances their strategic decisions, instead of simply masquerading as strategy?” I liked the question and have written my 34th Year IIIPlaying to Win Practitioner Insights (PTW/PI) piece on: How to thwart Strategy Masquerades: Telltales & Productive Planning. You can find the previous 144 PTW/PI here.
Planning Masquerading as Strategy
I’ll start with the second part of the question first — about planning masquerading as strategy — to put the answer to the first part in context. To ensure that planning doesn’t get away with masquerading as strategy, a company can watch for warning signs and correct them to reroute planning back to strategy.
These are the five telltale warning signs:
It’s Inconsequential
Strategy always involves giving up something to get something else better. If we decide to offer only a single class of service, the consequence is that first class passengers will fly elsewhere. If we choose to offer only index funds, the consequence is that investors desirous of managed funds will invest elsewhere. If the opposite of your choice is stupid on its face, it causes no consequences and it is likely to be planning. Planning involves being non-stupid. Strategy involves consequences.
If your strategy discussions seem to be drifting towards being inconsequential, ask how you can push the choices you are considering toward something more consequential. For example, don’t choose blandly and inconsequentially to be a ‘quality provider.’ Choose to define quality in a way that will appeal heavily to some and be uninteresting (or even repulsive) to others. Versace’s bright colors and bold patterns appeal to some high-fashion customers and drive others to more subdued Chanel. That is consequential.
It’s Fragmented
In strategy, everything is connected to everything else. My father prohibited his salespeople from ever selling at a price other than one on that week’s published price list so that his salespeople would be able to spend the majority of each sales call selling the company’s service and quality, not haggling over price. For him, pricing policy was integrally tied to salesforce effectiveness. That is strategic.
In planning, every organizational chunk, whether function, offering, or region, puts forward its wish list, and the company prioritizes the list. Each wish item is considered largely if not entirely on its own merits. The company then goes down the list, funding as many wishes as it can afford.
If you can’t discern how each of the company’s choices fits with and reinforces the other choices, you can be pretty certain that you have descended into planning. To reverse course, you need to walk through the planning choices and develop a connected diagram of them. What is the system that connects every choice to the other choices? If you can’t, you have a plan and you won’t like the consequences.
It’s Internal
Strategy is centrally about how the inside of the company — its capabilities and management systems — connects with and influences the outside world — its customers and competitors. How do our internal R&D and manufacturing capabilities enable us to put detergent, softener, and bleach in a single pod in a way that delights our customers and outflanks our competitors?
In planning, the inside elements dominate considerations. The outside things tend to be assumed. If we build this factory, customers will buy its output. If we hire 100 more salespeople, customers will buy an incremental amount equal to 100 times our average sales volume per salesperson. If instead, you always insist on spending as much time discussing external actors as you do internal actors, you will prevent your strategy from drifting into planning.
It’s Control Obsessed
Strategy is centrally about compelling the thing you don’t control — your customers — to take actions you wish they would take. No matter what you do, you will never be in control of your customers. If you start assuming that just because you want them to buy a certain volume of your offering, they will comply, then you are planning — and you will be sorely disappointed. Control is a planning illusion.
If you see your organization obsessing about control, remind yourself of your personal life as a customer. Remember how you think about and treat providers who act like they control you. You are highly motivated to not comply with their desires; to find an alternative to get away from them. Then think about your customers again and consider how you could most powerfully compel them to take action you wish — and you will be back in the realm of strategy.
It’s Extrapolative
Strategy creates a future that does not now exist. That can’t be accomplished by using inductive or deductive logic to extrapolate the past into the future. If your discussion focuses on ‘what the data tell us we should do,’ that is a planning discussion, not a strategy discussion. Planning doesn’t create. Planning organizes.
To migrate a planning effort toward strategy, harness the power of abductive logic — the source of all new ideas. This form of reasoning takes in information of all types and makes an inference to the best explanation. People (in 1999) are frustrated that they have to return to the office to get their emails. If we could provide the ability to receive their emails on their belt, such a device would be a big hit. Abductive logic doesn’t prove anything: it imagines a future to create. That is strategy, not planning.
Planning Complementing Strategy
The other half of the question is trickier: ‘What practical step can companies take to ensure that their planning truly complements and enhances their strategic decisions?’ It is thorny because lots of people in companies love to plan. They love to convert strategic decisions into plans as quickly and comprehensively as possible. They want timelines and deliverables. Their ultimate goal is a budget that specifies responsibilities, who can spend how much on what things — and associated revenue targets. They want it fast — preferably in one step.
The enemy is abrupt conversion from strategy to budget. Based on a strategy decision, we need to invest $200 million, and the first-year revenue increase will be $50 million in incremental sales. It feels good. And it feels great to hold somebody accountable for spending exactly $200 million and somebody (else, maybe) for generating the incremental $50 million — exactly. It is deployed — hurrah!
But this is mainly just fantasizing. The numbers are generally made up — with the best of intentions but with a paucity of insight. Generally, in any sizable company, those initial strategy decisions — for example at the company level — necessitate further strategic choices at — for example — the business unit level and, in turn, those necessitate further strategic choices at the product/service level. Of course, in a tiny company like a corner store or an Internet start-up, top level strategy choices can be readily converted to a plan/budget. But in any sizeable company, multiple sets of strategy choices need to be made before the company can have a precise budget for costs and something better than a fantasy budget for revenues.
Restraint is the key. Proceed in a measured way. The answer to the reader’s question is that the practical step after strategy is to charter the next level of choices. Don’t leap to a detailed plan or budget. Think about the next level of strategy choices and how, when you have made them, they will better inform your plan and your budget.
The more restraint you show, the better off you will be. I know that everyone is in a hurry for clarity and concreteness. I don’t dispute it. But if you wait, you will be rewarded with plans and budgets that will be helpful, not ones that will constrain you in ways that will hurt you. They won’t commit you to investment plans that are not connected to competitive reality. They won’t commit you to revenue forecasts that will cause you to take desperate, brand-depleting actions with customers.
Practitioner Insights
As I have argued previously, planning loves to masquerade as strategy. Eternal vigilance is required. Be wary of the five telltale signs. I suggest that you keep the list in front of you in strategic planning meetings. Is the work inconsequential, fragmented, internal, control obsessed, or extrapolative? You will almost certainly see one or more of these features appear before your eyes — because planning loves to masquerade as strategy. Strategy is cool, planning is not. So, planning will always attempt to masquerade as strategy.
When you have made a set of strategy choices, step back and ask what should come next. Don’t reflexively create a plan/budget — no matter how attractive that may feel. Instead, ask yourself if you would just be guessing at the budget implications of your choices. Ask whether if you chartered the next level of choices, you would be in a much better position to create a detailed plan/budget. If it is the latter, restrain your inclination to race forward. Go one step at a time and you will end up with a useful budget rather than the usual — a useless budget that makes for worse decisions rather than better ones.
